retail news in context, analysis with attitude

Published on: April 15, 2009

The Grocery Manufacturers Association (GMA) released the results of a survey that it conducted of food industry experts attending the GMA Science Forum. Among the revelations:

• “Virtually 100% of industry scientists who responded agree that food and beverage manufacturers are responsible for producing safe products and that the industry must be committed to modernizing, strengthening and improving the nation’s food safety system.”

• “90% agree that FDA must be given increased funding and new authorities to prevent contamination of the food supply.”

• “90% agree that, in addition to the food safety practices, testing and procedures utilized by food manufacturers, the modernization of our food safety laws and standards is critical to improving America’s food safety net.”

• “86% agree that FDA should require every food manufacturer to adopt and regularly update a food safety plan.”

• “88% agree that food importers should be required by the FDA to document the steps they are taking to police their foreign suppliers.”

• “98% agree that the FDA should be allowed to set federal standards for fresh fruits and vegetables.”

• “80% agree that the FDA should be given mandatory recall authority when a company does not comply with a voluntary recall request.”

“These results not only show that the industry experts who are on the front lines of food safety hold themselves accountable for producing safe products, but that they also see strong government oversight as a critical component of food safety,” said Pamela Bailey, GMA’s president/CEO.

Published on: April 15, 2009

The 2009 Colloquy Loyalty Census is out, showing that membership in U.S. loyalty rewards programs has reached 1.808 billion, up 24 percent from the 1.3 billion total reported in the last census in 2007.

However, much of the growth is attributable to the inclusion of three business segments – car rentals, cruise lines and mass merchandisers – not included in the 2007 report. According to the survey, “If these new industries are removed, the adjusted 2009 U.S. census total stands at 1.673 billion.”

The report goes on: “Colloquy pegs the number of active memberships in U.S. loyalty programs at 792.8 million … Definitions of active memberships vary from company to company; but a typical example is a member that has at least one instance of activity, such as earning points on a purchase or redeeming for a reward, within a 12-month period. The 792.8 million number means the rate of active membership is relatively flat at 43.8%, compared to 39.5% in 2007.”

Published on: April 15, 2009

Retail Forward’s new ShopperScape survey shows that “shoppers are limiting spending on food and other household necessities, trading down (in terms of both products and retailers), seeking deals and shifting their grocery shopping and eating patterns.” Perhaps more significant, the survey suggests that some changed behaviors could end up being permanent, such as “buying fewer items that seem ‘just too expensive,’ buying fewer items on impulse, coupon-clipping and using store circulars to plan the shopping trip.”

“The results of our survey signal the need for food, drug and mass retailers and their manufacturer partners to prepare now and adapt to a ‘new normal’ in shopping behavior,” said Kelly Tackett, a senior consultant with Retail Forward and author of the survey report.

Published on: April 15, 2009

Marketing Daily reports that according to a survey conducted by the American Marketing Association (AMA) and Fleishman-Hillard, “more than half of corporate marketers and communicators believe that their organizations will increase their involvement in environmental sustainability initiatives during the next two to three years,” and that “half of those surveyed believe that economic realities will encourage the adoption of such practices.”

Also of note: “Nearly one in six (58%) believe their companies will place more emphasis on developing corporate sustainability opportunities in the months ahead, despite economic realities,” Marketing Daily> writes. “But how those companies will talk about these efforts is uncertain. More than half do not expect to increase communications about sustainability. About 43% say their companies will increase marketing of these programs because it is the right thing to do; customers are asking for more information; it is supportive of the corporate culture; and because sustainability offers a clear and distinct business advantage.”

Published on: April 15, 2009

A legislative committee in the Connecticut General Assembly has unanimously voted to phase in restrictions on the making of baby bottles and other food containers with bisphenol-A, or BPA, which some scientists believe poses health risks to children.

BPA has been the subject of some controversy, with a series of studies linking BPA with health problems that include diabetes and heart disease. However, the US Food and Drug Administration (FDA) has published a draft assessment saying that BPA does not pose a health hazard when people are exposed to small amounts, and that conclusion has been confirmed by European Food Safety Authority (EFSA) Authority, Health Canada, the World Health Organization, Health and Consumer Protection Directorate of the European Commission; the European Chemical Bureau of the European Union; the European Scientific Panel on Food Additives, Flavorings, Processing Aids, and Materials in Contact with Food; and the Japanese National Institute of Advanced Industrial Science and Technology, as well as the Grocery Manufacturers Association (GMA) and the American Chemistry Council.

However, that hasn’t stopped the Canadian government, Consumers Union (CU), the Consumer Federation of America (CFA) and Walmart from disagreeing with the FDA decision; in Walmart’s case, it is not selling children’s products containing BPA. In New York State, Suffolk County has banned the use of bisphenol A (BPA) in empty beverage containers for children under the age of three, and California, Oregon, and Hawaii also are considering some sort of restrictive legislation. Sen. Charles Schumer (D-New York) said that he plans to introduce similar BPA-banning legislation in Congress.

Published on: April 15, 2009

The Birmingham Business Journal reports that the US Bankruptcy Court has ordered Bruno’s Supermarkets to auction off its assets on April 22.

According to the story, “The bankrupt supermarket chain has been shopping for a buyer since filing for chapter 11 in February, but it has said union contracts for its employees are hindering the sale. Earlier this month, Bruno’s notified the state and its employees that 38 of its stores in Alabama may close if a buyer doesn’t come forth.

Published on: April 15, 2009

Crain’s Chicago Business reports that JM Smucker-owned Folgers plans to lower its prices in June, which could put pressure on Kraft Foods to do the same thing on its Maxwell House brand.

Published on: April 15, 2009

SeattlePI.com reports that a former Starbucks employee, Leu Noga, has sued the coffee giant, claiming that he was fired after more than seven years of employment when he complained that “workers at the facility were overworked and, in at least one case, untrained.”

In a statement, Starbucks said that it is confident that the termination was deserved and justified.

However, the PI notes that “Starbucks was fined $3,400 for violations found during an inspection that followed the forklift incident referred to by Noga. Inspectors found that untrained workers were operating forklifts, and that aisles were not well marked. A department spokeswoman said Starbucks did not appeal the citations.”

Published on: April 15, 2009

A new report published in the Archives of Internal Medicine suggests that what we don't know about the impact of certain foods on heart health is a lot greater than what we do know.

For example, when it comes to foods such as meat, milk and eggs, there have been a range of studies – almost 200 cited in the study - that argue both sides of the case: some say they are good for you, some say not so much.

However, the report does say that the evidence is pretty strong in certain categories. Vegetables and the Mediterranean diet are good for the heart, it says, and starchy carbohydrates and trans fats are bad for you.

Published on: April 15, 2009

• Published reports say that KFC is rolling out this week on a nationwide basis its new Kentucky Grilled Chicken, which is described as an ambitious attempt to convince consumers that its fast food can be healthy.

"It's going to get people who haven't eaten KFC for a long time to come back into our restaurants," said KFC President Roger Eaton. "It's going to get people who have never eaten KFC to come into our restaurants."

Published on: April 15, 2009

• Scott Harrison, Food Lion’s senior vice president of Technology, and Efficiency and Chief Information Officer (CIO) has been promoted to the newly created position of CIO for Delhaize Group U.S., which is the parent company of Food Lion, Hannaford and Sweetbay.

• Ahold-owned Giant Food announced that Paula A. Price, the SVP/Controller/Chief Accounting Officer for CVS/Caremark Corp., has been appointed as the chain’s Chief Financial Officer. She succeeds Jim Rojas, who had previously announced that he was leaving the company.

Giant also announced that Paula Labian has been named Executive Vice President of Human Resources; for the past six years, she served as Chief Human Resources Officer (CHRO) and Global Vice President of Human Resources for Whole Foods Market. She replaces John Bussenger, Executive Vice President of Human Resources from Ahold-owned Giant Food Stores of Carlisle, PA, who assumed the responsibilities on an interim basis.

Published on: April 15, 2009

• Johnson & Johnson said that its first quarter net income was $3.5 billion, down from $3.6 billion during the same period a year earlier. Revenue fell just over seven percent, to $15 billion.

Published on: April 15, 2009

On April 15, 1955, Ray Kroc opened his first McDonald’s in Des Plaines, Illinois, a year after entering into a nationwide franchising agreement with the original McDonald brothers. The unit featured the Golden Arches, seen for the first time, and first day sales were $316.12.

Published on: April 15, 2009

MNB had a story yesterday about how Ahold-owned Stop & Shop is testing the use of hand-held scanning technology - which allows shoppers to scan products as they place them in their shopping carts, keep a running total and then pay at the end without going through a traditional checkout line.

I commented, in part:

Is it just me, or does it occur to anyone that this so-called “new” technology has been around so long that it doesn’t quite deserve to be called “new” anymore?

Now, I’ve seen this kind of technology work; at Delhaize-owned Bloom, for example, it is part of the overall package and makes sense in terms of the technology-driven approach being used for that particular format. And, by the way, they’ve been using it at Bloom for years.

At Ahold and Stop & Shop, the questions they should be asking themselves include:

• Are these devices being used as a tactic or as a strategy? (The right answer is “tactic.”)

• What is the broader strategic vision for Stop & Shop that these devices serve?

• If it is such a winner, why is the technology not in every Stop & Shop?

Here’s what I think. These hand-held scanning devices promise speed, and it is debatable whether they really provide it. But I don't think it matters. I think what the consumer really wants, far more than speed, is access to a transparent information flow that gives broader and deeper knowledge about the products that people are thinking about buying.

And even though an awful lot of stores don't have this technology, it somehow just feels old to me … and not representative of a strategic, long-range approach to food retailing.

Got a lot of response to this…

MNB user Paul Schlossberg wrote:

I encountered hand-held scanners for the first time early in 1998 at Ahold's Albert Hein store - in Haarlem (The Netherlands). More than 10 years ago.

This is not new - even if it is in the news. Retailers here are still evaluating this "revolutionary" new technology. This is simple. It's about saving time for the customers you serve. Shoppers will reward retailers delivering on "value" with repeat purchases - more frequent visits and a bigger share of dollars spent. Value is more than a singular dimension - low prices. Another element of value is "saving time."

Are there shrink-control issues to be managed? Absolutely. Test it! Find out what works and what doesn't. Not being willing to test new ways to serve shoppers says a lot, It shows which retailers will survive and prosper - and clearly indicates those headed for the "irrelevant" list.

I live in the ex-urbs, about 60 miles north of NYC. Two of the four supermarket chains in our area have self-checkout. The other two do not. On a fill-in shopping trip, needing only a few items, I'm more likely to go to one of the chains offering self-checkout. The time saved is meaningful - even if the products at one chain tend to be more expensive.

MNB user Tom DeMott wrote:

These handheld devices started in Europe around 1998, so Ahold should be celebrating their 11th anniversary.

MNB user Mike Griswold wrote:

The debate will be a store device versus the shoppers existing mobile device. I believe the future will be communicating with the shopper on their device and as technology expands to include near field communication and the ability to turn your mobile phone camera into a scanner, the value of a store specific device becomes less and less.

Another MNB user wrote:

It is my understanding that this is a transitional technology that will eventually lead to the cell phone as the primary hand held shopping device. As hand held phones become smarter, and 3G and 4G give us more bandwidth, they can read purchases and display information that the shelf tag may contain... recipes, meal ensembles, wines for the meal, other deals of pet products if dog food is scanned, etc. The shopper would scan her purchases, download the data at the check out and the phone would “pay” using her credit card or phone company account. I believe this model is most advanced in South Korea where it is said that Korean teen girls may be the most sophisticated shoppers in the world. There they use their phones in malls , grocery stores and vending machines to scan, get information, and pay.

We are probably a few years away from this in the US as cell phone sophistication evolves. It will also require that Americans are OK with their cell phones as their primary screen. A walk down the streets of New York, in any major mall, or airport would tell me that there are quite a few people who seem very comfortable with their Blackberrys/Treos/iPhones as the device of choice. I agree that the hand held device as another new piece of technology is probably doomed. But seen as an extension of an already established behavior, it makes some more sense.

Another MNB user wrote:

I love the hand held scanners at Stop & Shop! You can bag your own groceries and make sure the bread doesn't get squished. You can even scan produce after weighing it and printing a bar code sticker. It's great to be able to see what you have 'spent' in your shopping cart while you're still shopping. All while you're checking to make sure the prices ring up correctly. Who wants to wait in line to check out when you don't have to? In this past faced lifestyle, who wants to wait at all? Checking out was the worst part of grocery shopping, now it's a breeze!

And MNB user Jon Kramer wrote:

The Modiv Media device is much more than merely a scanner. It provides the ability to order remotely from the Deli, and by tying into frequent shopper card data, offers shopper discounts on brands and categories they purchase. As such it is an all around “shopper solutions tool.”

After quite a few years of testing, the Modiv devise is now rolling out more broadly. In a recent trip to Stop & Shop, in conversations with the store manager, he indicated the only problem was he did not have enough scanners.

In speaking with shoppers they seem to really appreciate both the functionality and information provided.

Maybe. But I remain skeptical…and cannot shake the feeling that this is dated technology.




It was reported yesterday that Anheuser-Busch InBev may be considering the sale of its Rolling Rock brand, which has seen sales drop 13 percent since 2004, which is ironic since Anheuser bought Rolling Rock from InBev for $82 million three years ago, long before InBev bought Anheuser-Busch for $52 billion in 2008.

My comment:

It’s funny…I used to drink Rolling Rock, but over the years have switched to other brands, like Landshark, which is my current favorite among lighter US brews. (Also an A-B brand, by the way.)

Whether it is owned by A-B or sold to someone else, the owners have to remind people like me why I liked Rolling Rock, and rekindle a kind of emotional connection. Not easy, but it’s a lot easier to make that connection with a beer than with, say, Brussels sprouts.

One MNB user responded:

My husband and I were long-time, die-hard fans of Rolling Rock Beer. Wherever we relocated, we insisted the local distributor carry it for us. It doesn't take a rocket scientist to figure out why sales are dropping. AB took a locally brewed beer - the pride of Latrobe, PA - closed the plant and transferred operations to Newark NJ. Somehow, Newark NJ does not conjure up the same vision of mountain spring water from "the Laurel Highlands" of Latrobe, PA. Yuengling, the oldest brewery in the US, family owned and local to Pottsville, PA, is now our beer of choice.

MNB user Tim Heyman agreed:

Rolling Rock was a unique beer, small brewery, hand crafted in the Hills and from the rolling springs of Latrobe PA.

Now it’s mass produced with the waters of where, New Jersey!

They buy the brand, shut down the brewery, and put how many people out of careers/livelihoods. Those who drank it for decades know exactly what happened and now choose not to drink Rolling Rock.

And MNB user Chris Esposito chimed in:

I’ve met a lot of people from Western, PA (mainly the Pittsburgh and surrounding area) who unanimously stated that once A-B bough the brand and moved it from Latrobe to Newark, they stopped drinking it (now they seem to drink Yuengling). Also, knowing a lot of “beer geeks”, home brewers and individuals in the craft beer industry, I can say that a lot of people also viewed the purchase by A-B as destroying the individuality of the brand, kind of like when A-B made an investment in Redhook (or Budhook as people then called it). Rightly or wrongly, there is a perception of the artisan quality to small breweries that people like and that gets lost when these small breweries are gobbled up by the large conglomerates. I think this also is evident when these large breweries produce “micro” brews under new names and don’t disclose the owner of the brand (such as in Coors' Blue Moon label or A-B’s Shock Top). To me, the smaller, regional brewers (Brooklyn, Harpoon, Dog Fish, etc.), make great products and I hope they stay independent. One only has to look at how Miller ruined the Celis label to realize what can happen.

Still another MNB user wrote:

I remember why I drank Rolling Rock in college…… 3/$1 at Ronnie’s Suburban Inn outside Rochester, NY. Couldn’t beat that price with a stick!




Finally, MNB yesterday took note of two prominent deaths: Harry Kalas, the longtime broadcaster for the Philadelphia Phillies, who died yesterday at age 73, and Mark Fidrych, the colorful and idiosyncratic pitcher who became nationally known when he played for the Detroit Tigers in 1976, who died in an accident at age 54.

But one of the reasons I am passionately in love with the MNB audience is that I got the following email:

I was surprised you didn’t mention the passing of Marilyn Chambers. I thought you thrived on controversy.

You’re right…I saw the obituaries written for the star of the porn classic “Behind The Green Door,” who died at age 56, but I neglected to include a mention in MNB.

Shame on me.

Chambers actually had a connection to the food retailing business – at the same time “Green Door” came out, she also was featured as the mom, cuddling a cute baby, on boxes of Procter & Gamble’s Ivory Snow detergent, which generated both ticket sales for the movie and sales for the detergent. (P&G changed the box graphic pretty quickly.)

It was the early seventies, a long time ago, a time when porn sort of emerged from the closet and achieved a certain level of notoriety, with the success of three films – “Green Door,” “The Devil & Miss Jones,” and, of course, “Deep Throat.”

Seems like an entirely different world, doesn’t it?